The question “who is your competition?” seems so simple, however, a company that defines its competitive set too narrowly can miss disruptive attackers and high potential growth opportunities. Just take a look at Blockbuster, Nokia and Kodak. They were all market leaders who fell prey to either disruptive technology or market changes. How can your company avoid a similar fate?
So who is your competition really? Is it:
- Other organisations offering the same product or service now?
- Other organisations offering similar products or services now?
- Organisations that could offer the same or similar products or services in the future?
- Organisations that could remove the need for a product or service?
Let me guide you:
1. Define your target/objective
Far too often, organisations make decisions too quickly and without a strategic context — it is a case of ‘ready, fire, aim’. The internet has not helped this mindset, as the speed to market has become a more critical factor. Understand what you are looking to maximise.
2. Ask the right question or questions
Experience has shown that ‘asking the right question’ is one of the hardest steps for management. The key here is to understand what your business really wants, and how the insights uncovered will directly relate to a management decision or course of action.
3. Manage information effectively
The next driver for understanding what you have and don’t have within the business needs to come from studying the forces at work on your business’s competitive ability. These forces include competitors, technology, consumers, new entrants, industry trends and so on. Getting information on these forces is the first step in becoming knowledgeable about your competitive environment.
4. Analyse for insight and intelligence
A strategic plan that doesn’t include insight about the near future is truly next to useless. Yesterday’s information and methods are increasingly ineffective for making today’s decisions — and even less effective for identifying tomorrow’s opportunities, problems and unknown competitors.
The value of insight is early awareness, as it enables you to recognise and monitor the future as it unfolds, thereby reducing risk and minimising mistakes.
Today, managers are faced with many pressures — they may sometimes seek only short-term gains — but costly mistakes from managers making uninformed decisions are no longer an option.
Today, competing effectively is not just understanding existing competitors and the current business environment. It is strategically about having a picture of what the future business environment will look like and addressing the questions I posed at the start.
How your business prepares for the future will provide you with either a strategic advantage — or the demise of your business. The most critical strategic issue for a business is its competitiveness.